Full opinion text
ORDER Granting Motions to Dismiss the Amended Complaint MARIANA R. PFAELZER, District Judge. In this mortgage insurance case, an insurer (“United Guaranty”) sues two affiliated mortgage companies (collectively, “Countrywide”; separately, “Countrywide Financial” and “Countrywide Home”) and a mortgage securitization trustee (“BNY Trust”). The original complaint asserted contract, tort, and statutory claims. Countrywide and BNY Trust moved to dismiss the original complaint. The claims for breach of contract and breach of implied covenant survived. The other claims were dismissed with leave to amend, primarily for failure to overcome the economic loss rule, which generally bars tort claims for contractual breaches. United Guaranty then filed the Amended Complaint (“AC”). Now before the Court are motions to dismiss the tort and statutory claims reasserted in the AC. The motions are granted in their entirety. I. BACKGROUND A. Procedural posture. This insurance dispute has generated three court cases and several arbitrations. Two of the cases are pending before this Court. United Guaranty filed the present case in this Court. The other case was filed by Countrywide in California state court; United Guaranty subsequently removed that case to this Court. United Guaranty filed the third case in North Carolina federal court, citing forum selection clauses. Each side also initiated arbitration proceedings against the other. A prior order, the “Omnibus Order Resolving Three Jurisdiction-Related Motions,” details the parties’ procedural maneuvers. Docket no. 84 (July 1, 2009). Of the two cases before this Court, the present case is narrower in factual scope and broader in legal theories. In it, United Guaranty sues on eleven “Master Policies” that insure first-lien mortgages that Countrywide securitized. United Guaranty asserts claims in contract, in tort, and under California statutory law. B. The securitizations. In the securitizations, Countrywide affiliates conveyed a pool of mortgages to a first trustee. In exchange for the mortgages, this first trustee issued debt instruments that represent a right to proceeds from trust assets (such as incoming mortgage payments by homeowners or, perhaps, mortgage insurance proceeds). Countrywide and a second trustee, BNY Trust, obtained mortgage insurance on a subset of the securitized loans from United Guaranty. BNY Trust (in its role as a trustee) is the sole named “insured” on the policies. The first trustee is not party to the mortgage insurance transaction; it is likewise not a party to this case. Altogether, the securitizations in issue “encompass[] over $13 billion” of mortgage loans. AC ¶ 35. C. The complaints. United Guaranty’s original complaint asserted seven claims. Countrywide and BNY Trust each filed a motion to dismiss. Two contract claims survived the motions. They are: (claim 1) breach of contract against Countrywide Home and BNY Trust; and (claim 2) breach of the implied duty of good faith and fair dealing against Countrywide Home. In granting the remainder of the motions, the Court provided United Guaranty brief statements of its reasoning. The Court further granted United Guaranty leave to amend. United Guaranty amended by filing the AC. The AC substantially reasserts the dismissed claims, though it adds allegations, attaches two appendices, and rearranges some defendants. Countrywide and BNY Trust each filed a motion to dismiss the AC. These motions are now before the Court. The AC claims addressed in the motions are: (claim 3) fraudulent inducement against Countrywide Home and Countrywide Financial; (claim 4) negligent misrepresentation against Countrywide Home and Countrywide Financial; (claim 5) negligence against Countrywide Home and BNY Trust; (claim 6) rescission against Countrywide Home and BNY Trust; and (claim 7) California’s statutory Unfair Competition Law against Countrywide Home and Countrywide Financial. For the reasons that follow, claims 3-7 are DISMISSED WITH PREJUDICE as to all defendants. II. LEGAL STANDARD A motion to dismiss tests whether properly pled allegations, if true, amount to an actionable claim. Ashcroft v. Iqbal, — U.S. —, 129 S.Ct. 1937, 1950, 173 L.Ed.2d 868 (2009). In evaluating a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a court must accept as true all properly pled allegations of material fact in the complaint and read the complaint in the light most favorable to the nonmoving party. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir.2001); Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995). However, a court will not accept as true unreasonable inferences; nor will it accept legal conclusions cast in the form of factual allegations. Iqbal, 129 S.Ct. at 1949. A complaint may be read together with documents incorporated by reference and facts appropriate for judicial notice. Parrino v. FHP, Inc., 146 F.3d 699, 706 (9th Cir.1998); Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir.2001). Pleading generally requires a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. Proc. 8(a)(2). Showing entitlement to relief requires “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This “plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully....” Iqbal, 129 S.Ct. at 1949 (citing and quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955 (internal quotations omitted)). Plausibility is “context-specific” and takes into account “judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950. But plausibility analysis does not license judicial whim; nor does it allow a court to blur the line between dismissal and summary judgment. See Twombly, 550 U.S. at 556, 127 S.Ct. 1955 (“[O]f course, a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.” (internal quotations omitted)). In addition, “the circumstances constituting fraud or mistake” — as opposed to “conditions of mind” — must be alleged “with particularity.” Fed. R. Civ. Proc. 9(b). Rule 9(b) ensures that defendants have adequate notice of the fraud’s “who, what, when, where, and how.” Kearns v. Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir.2009). Even if fraud is not “an essential element” of a claim, Rule 9(b) still applies to claims that “are grounded in fraud” (also known as claims that “sound in fraud”) and to “averments of fraud.” Kearns, 567 F.3d at 1124-25. Allegations that do not meet Rule 9(b) are “disregarded” or “stripped from” the complaint. Id. at 1124. A complaint that fails to meet these standards will be dismissed. Leave to amend should be given “freely ... when justice so requires.” Fed. R. Civ. Proc. 15(a)(2). However, dismissal with prejudice is appropriate if amendment would be “futile.” Reddy v. Litton Indus., Inc., 912 F.2d 291, 296 (9th Cir.1990). III. ALLEGATIONS The following allegations come from the AC, are assumed true, and are stated in the light most favorable to United Guaranty. No allegations have yet been “stripped” for failure to comply with Rule 9(b). A. United Guaranty and its business with Countrywide. United Guaranty provides mortgage insurance, which “shifts some of the risk of default from the lender to the insurer.” ¶ 2. Mortgage insurance covers the difference between the lender’s loss “after foreclosure and sale” of a mortgaged property. ¶ 27. United Guaranty has extensive experience in mortgage insurance, having sold it “to a wide variety of clients” since 1963. Id. United Guaranty and Countrywide have done business “for over forty years.” Id. During its business relationship with United Guaranty, Countrywide “made specific oral representations” to United Guaranty, such as that “Countrywide had developed stringent underwriting procedures [and that] Countrywide strictly followed those procedures.... ” ¶ 44-45. Countrywide also provided “Technical Manuals” that represented that Countrywide “rarely underwrote loans that were exceptions to its underwriting guidelines, and, when it did, it required significant documentation to justify the exception.” ¶ 46. Since 1990, United Guaranty has used a “delegated model” for underwriting Countrywide loans. ¶29. This means it chose to “rel[y] on Countrywide to represent information on the loans to be insured.” Id. Such information includes borrowers’ minimum credit scores and the mortgages’ loan-to-value ratio (i.e., the amount loaned versus the property value). Id.; ¶44. United Guaranty used this information to decide whether to offer insurance on those loans. ¶ 29. B. The eleven policies in suit. Countrywide obtained the eleven policies at issue between October 2006 and June 2007. ¶¶ 4, 35, 38, 43. The policies covered loans for securitization, with BNY Trust as the securitization trustee holding mortgage insurance. ¶ 2. The loans were “subprime,” a class of loans that are inherently riskier than “traditional” loans. ¶¶ 5, 7. Despite United Guaranty’s experience with mortgage insurance in general, and Countrywide in particular, “United Guaranty had limited experience in the sub-prime market.” ¶ 5. To reassure United Guaranty, “Countrywide made multiple representations and traded on its longstanding relationship with United Guaranty to induce United Guaranty to issue the [eleven policies].” ¶ 5. More specifically, “Countrywide falsely represented to United Guaranty that it had originated the underlying Mortgage Loans in strict compliance with its underwriting standards and guidelines, which were developed over time” to reduce default risk. ¶ 6. Countrywide sent United Guaranty data containing “false information on the individual loans, including misrepresentations regarding characteristics of the loans and the creditworthiness of the borrowers.” Id. “Countrywide knew that United Guaranty would rely on this data in determining which loans to insure and what premiums to set.” Id. BNY Trust signed the letters containing Countrywide’s representations, assuring United Guaranty “that each Mortgage Loan was accurately described and underwritten in accordance with Countrywide’s underwriting guidelines and prudent underwriting judgment.” ¶¶ 10, 50-53. Based on the foregoing, “United Guaranty priced and issued” the policies to BNY Trust. ¶ 7. It bears emphasis that the insurance policies were issued in what the parties refer to as “bulk” or “pool” transactions: altogether, the eleven transactions involve thousands of loans and “encompass[ ] over $13 billion” in residential mortgages. AC ¶¶ 35-38. C. The events leading to suit. “In reality, Countrywide had abandoned any reasonable and prudent underwriting standard[s].” ¶ 8. And BNY Trust “failed to take any steps to uncover Countrywide’s fraud or the inaccuracy of its own representations.” ¶ 16. As a result, “in the summer of 2007,” the insured loans “began to show a high number of delinquencies.” ¶ 62. As claims were submitted, United Guaranty’s claims investigations “revealed an unusually high rate of fraud in connection with the Mortgage Loans for which the claims were submitted.” Id United Guaranty’s denial rate for claims under the policies was 50% (compared with a 13% denial rate for other first-lien loans). ¶ 66. United Guaranty then “commenced an investigation to determine whether it was the victim of “systemic originator fraud”' — ■ that is, fraud by Countrywide as opposed to the mortgage borrowers. ¶ 66. To investigate, United Guaranty audited the loans underlying two of the securitizations. ¶ 66. The audit revealed that “over 55% of the Mortgage Loans either failed to comply with Countrywide’s underwriting guidelines or contained some material defect.” ¶ 68. D. United Guaranty’s losses. The AC groups United Guaranty’s losses into two categories: (a) losses it characterizes as “arising directly” from the policies, ¶ 73; and (b) losses it characterizes as arising “in several other ways.” ¶ 77. 1. Losses characterized as “arising directly” from the policies. “As of March 2009,” when United Guaranty filed this suit, it “had paid nearly $40 million” in claims under the eleven policies. ¶ 63. United Guaranty never would have issued the policies if it had known about Countrywide’s practices. ¶ 74. Even if United Guaranty would have issued the policies, it would have charged higher premiums for the increased risk caused by Countrywide’s practices. ¶ 75. United Guaranty further “believes it has paid claims” on loans for which it has no liability under the policies because United Guaranty failed, in its claims processing, to discover some “fraudulent loans and on loans that do not meet underwriting guidelines.” ¶ 76. 2. Losses characterized as arising “in several other ways.” United Guaranty has been “forced ... to place more than $120 million in reserve” to pay potential claims under the policies. ¶ 78. This displaced capital has “hampered United Guaranty’s ability to pursue other business opportunities.” Id. The large number of claims under the policies and United Guaranty’s presuit audit has caused United Guaranty to hire three additional claims adjusters. 1179. Relatedly, the large number of claims has increased the number of third-party claims investigators United Guaranty has hired. ¶ 80. Finally, because United Guaranty relies on historical data to price risk, it “must now incur the cost to review and scrub its databases of Countrywide’s false information.” ¶ 82. 3. BNY Trust’s role in causing losses. BNY Trust “still has not taken any steps to verify the representations it and Countrywide made to United Guaranty or to investigate Countrywide’s fraud.” ¶ 71. And BNY Trust “continues to allow claims to be submitted ... and to allow multiple, meritless appeals of United Guaranty’s” claims denials. ¶¶ 72, 81. IY. THE POLICIES The insurance policies define and limit the parties’ rights and obligations. In addition, several provisions are in considerable tension with some allegations in the AC. A. Judicial notice of the policies. United Guaranty does not attach any policy contracts to the AC. However, the contracts are readily identifiable because the AC states the unique identification number of specific securitizations; those securitizations, in turn, are associated with particular policy contracts. ¶¶ 35, 42-43, 49. The Court takes judicial notice of the contracts’ provisions. Notice is limited to what the contracts say; notice is not appropriate for the substantive truth of any representations made in the contracts. Lee v. City of Los Angeles, 250 F.3d 668, 688-89 (9th Cir.2001). Judicial notice is proper because the contracts are integral to the complaint and no party disputes the contracts’ identity and accuracy. During prior proceedings in this same case, the parties made a stipulated filing containing their contracts. Omnibus Order at 11 n. 9 (explaining the procedure); docket nos. 49, 52-57 (containing the relevant contracts). B. Policy components. Each policy comprises the same three standardized forms and a “commitment letter.” 1. Standardized forms. All eleven policies incorporate the same standardized forms: (1) the base “terms and conditions” form — for these policies, called the “Master Policy”; (2) an “amendatory endorsement,” another form which modifies some paragraphs in the Master Policy; and (3) a “declaration page,” which contains some fields for information customized to each transaction. See generally Haynes v. Farmers Ins. Exch., 32 Cal.4th 1198, 1207-08, 13 Cal.Rptr.3d 68, 89 P.3d 381 (2004) (discussing form insurance agreements and amendatory endorsements). Of the standardized forms, only the Master Policy is relevant to the current interpretive issues. 2. Commitment letters. Before each policy became effective, United Guaranty wrote a “commitment letter” to explain its understanding of the putative policy and the mortgages to be insured. Countrywide Home and BNY Trust then signed the commitment letters. After that, United Guaranty signed an “Accepted by” line. No other party signed the commitment letters. The commitment letters for the eleven transactions at issue contain the same provisions in the same locations. Likewise, factual representations regarding the insured mortgages are made in an “Exhibit B” — also known as a “loan tape” because it lists the mortgages and some data about them — to each commitment letter. Commitment letter citations (“CL”) therefore refer equally to any commitment letter. By the Master Policy’s terms, the commitment letters became part of the policy. Master Policy § 1.31. The commitment letters are, by far, the most detailed and customized component of the policies. C. Interpretive rules. Both the Master Policies and commitment letters contain California choice of law provisions. Master Policy § 6.8; CL ¶11. 1. General interpretive principles. “While insurance contracts have special features, they are still contracts to which the ordinary rules of contractual interpretation apply.” Powerine Oil Co., Inc. v. Superior Court, 37 Cal.4th 377, 396, 33 Cal.Rptr.3d 562, 118 P.3d 589 (2005) (internal quotations omitted). Contract interpretation is a matter of law and “solely a judicial function, unless the interpretation turns on the credibility of extrinsic evidence.” Super. Dispatch, Inc. v. Ins. Corp. of New York, 176 Cal.App.4th 12, 31, 97 Cal.Rptr.3d 533 (2009). See also Powerine, 37 Cal.4th at 389-90, 33 Cal.Rptr.3d 562, 118 P.3d 589. A policy will be interpreted, “if possible, solely from the written provisions of the contract.” Powerine, 37 Cal.4th at 390, 33 Cal.Rptr.3d 562, 118 P.3d 589. The entire contract must be considered: “[A]n insurance policy must be interpreted as a whole and in context.” Mirpad, LLC v. Cal. Ins. Guarantee Assoc., 132 Cal. App.4th 1058, 1070, 34 Cal.Rptr.3d 136 (2005). During interpretation, terms generally receive their “ordinary and popular sense unless used by the parties in a technical sense.” Id. at 1069, 34 Cal.Rptr.3d 136 (internal quotations and modifications omitted). 2. Resolving ambiguity. Where an ambiguity arises in contracts that involve both standardized form and customized components, the customized components generally control. Cal. Civ. Code § 1651. The commitment letters — drafted for each transaction and containing a schedule with representations about the insured loans — are the most customized component for present purposes. If, after reading a policy this way, “an asserted ambiguity is not eliminated ... courts then invoke the principle that ambiguities are generally construed against the party who caused the uncertainty to exist (i.e., the insurer) in order to protect the insured’s reasonable expectation of coverage.” Powerine, 37 Cal.4th at 391, 33 Cal.Rptr.3d 562, 118 P.3d 589. Ambiguity in insurance contracts is resolved against the insurer even if the insured is legally sophisticated and possesses significant negotiating leverage. AIU Ins. Co. v. Superior Court, 51 Cal.3d 807, 823, 274 Cal.Rptr. 820, 799 P.2d 1253 (1990). D. Transactional structure and key policy provisions. The following provisions provide background on the transactions’ structure and the policies’ provisions. These contractual provisions are important background to the legal discussion; United Guaranty’s legal arguments can only be understood in the context of the provisions’ necessary implications. The legal discussion cites additional provisions, where relevant. 1. Delegated underwriting. The Master Policy discusses United Guaranty’s standard delegated underwriting program. See, e.g., Master Policy §§ 1.34-38, 1A. Such a delegated model makes sense when engaging in bulk mortgage insurance transactions: the applicant represents material information about the mortgage, then the insurer prices and issues the policy based on that information. See AC ¶ 29. The commitment letters replace United Guaranty’s standard program with Countrywide’s “Subprime Guideline Summary.” CL ¶ 2. Specifically, the commitment letters recognize that, because the ordinary delegated underwriting guidelines “do not apply,” even very high loan-to-value ratios — including 100% loans — are covered. Id. The commitment letters refer only to the Subprime Guideline Summary in defining the loans that are eligible for submission to United Guaranty. Id. The “Technical Manuals” and other Countrywide representations regarding Countrywide’s general origination practices are not part of the delegated underwriting guidelines. See, e.g., AC ¶¶ 46 (discussing the “Technical Manuals”); 52, Exh. B (recognizing that the Subprime Guideline Summary, not the Technical Manuals, was substituted for United Guaranty’s ordinary guidelines). And the commitment letters contain an integration clause. ¶ 22. 2. United Guaranty’s audit rights. United Guaranty did not entirely abdicate underwriting to Countrywide. The parties chose to give United Guaranty audit rights — both before and after the policy transactions closed. CL ¶ 8.1; Master Policy 1A. 3(b). United Guaranty controlled the form in which the information was reported and reserved the right to request any additional information “which may be reasonably requested by United Guaranty.” CL ¶¶ 8.1, 8.3. The commitment letters further state that “United Guaranty shall request the right to perform due diligence on loans to be covered under the Policy.” CL ¶ 8.1 (emphasis added). United Guaranty’s commitment letter memorializes that the parties assented to these provisions “[i]n order to verify the accuracy of certain information ... and to expedite the issuance of the Policy.” CL ¶ 8.1 (emphases added). But see AC ¶¶ 55-56 (alleging that “Countrywide set up the [securitizations to close in periods ranging from as short as 11 days to as long as 38 days] so that United Guaranty was unable to exercise any right of access to loan files or conduct a loan-level review of the mortgage loans.... ”). 3. Separate coverage options and certificates. Though United Guaranty insured loans that were pooled for securitization, the Exhibit B “loan tapes” presented each loan as a separate “coverage option” to United Guaranty. After United Guaranty agreed to cover a particular loan, coverage for each loan became evidenced by a separate “certificate” for each loan. The Master Policy explains that United Guaranty chose to extend a “coverage option to a specified Loan.” §§ 1.10; 2.1. United Guaranty extended that option under the conditions precedent stated in a commitment letter. Id. See also CL ¶ 5 (defining the conditions precedent and specifying that “[f]ailure to comply with” certain terms of the Master Policy “may result in cancellation of coverage”). After those conditions were satisfied, the commitment became the “Certificate” that extends and evidences coverage for each “specified Loan.” Id. Master Policy §§ 1.07; 2.1. However, the certificate only incorporates representations with respect to the particular loan to which the representations relate. Id. § 1.31 (providing that all application materials and the commitment letter are “made a part [of the policy] with respect to the Loans to which they relate”). The commitment letters confirm that the attached “Schedule of Loans will serve as the Certificate for each loan insured by the Policy.” CL ¶ 4. But even if United Guaranty or BNY Trust exercise their cancellation rights, the cancellation goes only to the certificate — not the entire policy. Master Policy §§ 2.6 (cancellation by insured), 2.7 (cancellation by insurer). Accord CL ¶ 7 (providing for “automatic rescission]” as to individual loans under some circumstances); Master Policy § 2.8 (providing that coverage can “automatically terminate” under some conditions, but that the termination is only “with respect to any Loan” and that termination will result in “the return of all related premium for the time period after the occurrence of the event giving rise to the termination”). Indeed, the Master Policy confirms that “cancellation of a certificate will not cancel Policy.” § 2.6. Further, if a loan is assigned, the certificate generally follows the loan. § 2.14. And the commitment letter clarifies that “the intent of the parties [is] that the Policy cover only loans which are part of’ a particular securitization. CL ¶ 4. Thus, if the terms of the securitization require Countrywide to remove a loan from the securitization, then “the loan will be removed from coverage under the Policy and United Guaranty will have no liability under the Policy with respect to that loan.” Id. Two provisions contemplate that coverage could cease as to more than one loan at a time. The first provides that if the premium for a group of loans is not paid, then coverage may be canceled for the entire group of loans to which the premium relates. Master Policy § 2.5. The second, entitled “Discontinuance of the Issuance of Certificates by the Company; Cancellation of Policy,” requires United Guaranty to follow certain notice procedures. Master Policy § 2.9. Most important, it contains a proviso “that Certificates issued prior to the cancellation of this Policy shall continue in force so long as all premiums are paid pursuant to, and subject to all other terms and conditions of, this Policy.” Id. (emphasis added). 4. Provisions governing misrepresentation and fraud. Nothing in the policy documents contemplates cancellation, rescission, or termination of coverage for an entire loan pool insured under a Master Policy (what the parties call “poolwide rescission”) — not even for fraud. Instead, the policies expressly address fraud and allocate the risks of misrepresentation. Indeed, the policies specifically provide for borrower and originator fraud as to particular loans. Under the Master Policy, the Insured [i.e., BNY Trust] accepts the risk of any misrepresentations whether innocent or otherwise ... by the Borrower or any other Person in the loan application and in the appraisal, the plans and specifications, and other exhibits and documents submitted therewith or any other term thereafter and the subsequent misrepresentation of that same information to the Company [i.e., United Guaranty] in the [delegated underwriting] Form submitted [i.e., the Commitment Letter Exhibit B “loan tapes”] in connection with the respective Loan.” § 2.2(b) (emphases added). Thus, the insured accepts the risk of a material misrepresentation by anyone involved in loan origination — including Countrywide, because it meets the definition of “any other Person,” Master Policy § 1.29 — if the insured repeats that misrepresentation when applying for insurance. But the provision expressly provides only loan-by-loan remedies — “in connection with the respective loan” — and does not allow fraudulent representations by anyone involved with the origination of one loan to affect coverage for other loans. Id. This makes sense when insuring pools of mortgages that were originated by different loan officers, in different offices — and perhaps even by mortgage companies other than Countrywide. In such a transaction, the insured repeats the information provided by these myriad people; in a large enough pool, misrepresentations of some sort become nearly inevitable. But the Master Policy goes further, expressly providing for claims handling fraud by the insured. It lays out how the parties will handle “any Claim involving or arising out of any dishonest, fraudulent, criminal, or knowingly wrongful act (including error or omission) by any Insured or ... involving or arising out of negligence of any Insured, or any of their agents or employees .... ” § 3.5. It also governs what happens if a claim is excluded for failing to conform to the delegated underwriting guidelines. § 3.8. Of course, both these provisions provide remedies only with respect to an individual loan; neither allows claims fraud with regard to one loan to affect coverage of other loans. Id. §§ 3.5(b), 3.8. Y. DISCUSSION The AC’s tort claims (claims 3-5) fail for the same — or closely related — reasons. Accordingly, they are treated in the first section. The statutory rescission and Unfair Competition Law claims (claims 6 and 7) raise different issues and are addressed in separate sections. A. Tort claims. The three tort claims are negligence, negligent misrepresentation, and fraudulent inducement. United Guaranty asserts all three tort claims against Countrywide; it asserts only negligence against BNY Trust. Two issues — the pleading standard and the economic loss rule — pervade the tort claims’ analysis. The following discussion proceeds by explaining the pleading standard and economic loss rule, then evaluating the tort claims. 1. Pleading fraud. All three tort claims against Countrywide in this case are subject to Rule 9(b)’s heightened standard. “Under California law, negligent misrepresentation is a species of actual fraud” and is therefore subject to Rule 9(b). Lorenz v. Sauer, 807 F.2d 1509, 1511-12 (9th Cir.1987) (citing Gold v. Los Angeles Democratic League, 49 Cal.App.3d 365, 373-74, 122 Cal.Rptr. 732 (1975)). As for the negligence claim, the AC’s negligence allegations against Countrywide are indistinguishable from the allegations underlying the fraudulent inducement claim. See Countrywide Mot. at 6-7 (comparing the allegations in tabular form). The negligence claim is therefore “grounded in fraud” and Rule 9(b) applies. Negligence is the only tort asserted against BNY Trust. As against BNY Trust, the negligence claim does not sound in fraud. Rather, the AC distinguishes BNY Trust’s allegedly negligent conduct from Countrywide’s allegedly fraudulent conduct. See, e.g., ¶¶ 1, 50-53, 70-72, 81. Because only nonfraud claims are asserted against BNY Trust, and because BNY Trust’s role in the transactions at issue is carefully distinguished from Countrywide’s role, BNY Trust will not receive Rule 9(b) protection. In re Countrywide Fin. Sec. Litig., 588 F.Supp.2d 1132, 1162-63 (C.D.Cal.2008) (surveying “sounds in fraud” law in the securities context and concluding that Rule 9(b) does not apply where a complaint (1) distinguishes which defendants act fraudulently and which defendants do not act fraudulently; (2) specifies particularized allegations as to the fraud defendants; and (3) those particularized allegations do not raise an inference of scienter against the nonfraud defendants). 2. The economic loss rule. The economic loss rule generally bars tort claims for contract breaches, thereby limiting contracting parties to contract damages. Aas v. Superior Court, 24 Cal.4th 627, 643, 101 Cal.Rptr.2d 718, 12 P.3d 1125 (2000) (“A person may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations.”). a. The rule’s application and exceptions. Though the economic loss rule is easy to state, the rule’s application and exceptions are more conceptually difficult. Most of the parties’ arguments address the rule. Applying the rule to the present circumstances requires considering the rule’s exceptions and policy rationales. The rule “prevents the law of contract and the law of tort from dissolving into one another.” Robinson Helicopter Co., Inc. v. Dana Corp., 34 Cal.4th 979, 988, 22 Cal.Rptr.3d 352, 102 P.3d 268 (2004) (internal modification and quotations omitted). By preventing tort claims — and, thus, tort damages — the rule encourages parties to reach a mutually beneficial private bargain. Limiting recovery to contract damages makes it easier for parties to “estimate in advance the financial risks of their enterprise.” Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal.4th 85, 106, 44 Cal.Rptr.2d 420, 900 P.2d 669 (1995) (quoting Applied Equip. Corp. v. Litton Saudi Arabia Ltd., 7 Cal.4th 503, 515, 28 Cal.Rptr.2d 475, 869 P.2d 454 (1994)); Foley v. Interactive Data Corp., 47 Cal.3d 654, 694, 254 Cal.Rptr. 211, 765 P.2d 373 (1988). As a result, the rule is particularly strong when a party alleges “commercial activities that negligently or inadvertently [went] awry.” Robinson Helicopter, 34 Cal.4th at 991 n. 7, 22 Cal.Rptr.3d 352, 102 P.3d 268. b. Types of exceptions to the rule. California’s economic loss rule has exceptions that fall into two broad categories. The first category applies to products liability cases, where the California rule first arose. Robinson Helicopter, 34 Cal.4th at 991 n. 7, 22 Cal.Rptr.3d 352, 102 P.3d 268. In the products liability context, the rule may be overcome by allegations of “personal injury or damages to other property [besides the defective product].” Robinson Helicopter, 34 Cal.4th at 988, 22 Cal.Rptr.3d 352, 102 P.3d 268 (internal quotations and citations omitted). California’s economic loss rule has a second category of exceptions for breach of a noncontractual duty. These exceptions require the breach of a tort duty apart from the general duty not to act negligently. Id. at 988, 22 Cal.Rptr.3d 352, 102 P.3d 268. Indeed, “[i]f every negligent breach of a contract gives rise to tort damages, the [rule] would be meaningless, as would the statutory distinction between tort and contract remedies.” Id. at 990, 22 Cal.Rptr.3d 352, 102 P.3d 268 (quoting Erlich v. Menezes, 21 Cal.4th 543, at 553-554, 87 Cal.Rptr.2d 886, 981 P.2d 978 (1999)). Thus, the California Supreme Court emphasizes that courts should “focus[ ] on” intentional conduct when considering whether to allow an exception to the rule. Id. That Court has likewise admonished courts to “comprehensively to consider the implications of their holdings” before allowing tort claims to invade contractual relationships. Foley, 47 Cal.3d at 688, 254 Cal.Rptr. 211, 765 P.2d 373. California courts have found exceptions to the economic loss rule in the noncontractual duty category where the conduct also (1) breaches a duty imposed by some types of “special” or “confidential” relationships; (2) breaches a “duty” not to commit certain intentional torts; or (3) was committed “intending or knowing that such a breach will cause severe, unmitigable harm in the form of mental anguish, personal hardship, or substantial consequential damages.” Robinson Helicopter, 34 Cal.4th at 990, 22 Cal.Rptr.3d 352, 102 P.3d 268 (citing and quoting Erlich, 21 Cal.4th at 553-554, 87 Cal.Rptr.2d 886, 981 P.2d 978). c. Special “bad faith” exception for insurers. But the California Supreme Court recognizes that not all its decisions fit within this taxonomy. It created the taxonomy with the caveat that it applies “outside the insurance context.” Id. This caveat refers to a tort — the tort of “bad faith breach of the implied covenant of good faith and fair dealing” — that lies against an insurer under some circumstances, such as where the insurer “withholds payment [on a claim] unreasonably and in bad faith.” Benavides v. State Farm Gen. Ins. Co., 136 Cal.App.4th 1241, 1248-53, 39 Cal.Rptr.3d 650 (2006). The exception derives in part from the inapplicability of “efficient breach” to the insurance market, see supra n. 19, because no substitute insurance contract exists for a loss that has already occurred. Medina v. Safe-Guard Prods., 164 Cal.App.4th 105, 111, 78 Cal.Rptr.3d 672 (2008) (citing Cates Constr., Inc. v. Talbot Partners, 21 Cal.4th 28, 44, 86 Cal.Rptr.2d 855, 980 P.2d 407 (1999)). In addition, as with the special relationship exceptions to the economic loss rule, this exception may protect the party perceived as more vulnerable — the insured. The California Supreme Court has traced the exception to insurers’ “status as purveyors of a vital service labeled quasi-public in nature,” and because of the “inherently unbalanced” and “adhesive” nature of the relationship between insurer and insured. (Hunter v. Up-Right, Inc., 6 Cal.4th 1174, 1180-81, 26 Cal.Rptr.2d 8, 864 P.2d 88 (1993) (quoting Egan v. Mut. of Omaha Ins. Co., 24 Cal.3d 809, 819-20, 169 Cal.Rptr. 691, 620 P.2d 141 (1979)) (emphasis added)). Even so, the bad faith tort is a “rare exception[ ]” to the principle that “a business entity has no duty to prevent financial loss to others with whom it deals directly.” Quelimane Co. v. Stewart Title Guar. Co., 19 Cal.4th 26, 59, 77 Cal.Rptr.2d 709, 960 P.2d 513 (1998). The California Supreme Court recognizes that “the insurance cases represented ‘a major departure from traditional principles of contract law.’ ” Erlich, 21 Cal.4th at 553, 87 Cal.Rptr.2d 886, 981 P.2d 978 (quoting Foley, 47 Cal.3d at 690, 254 Cal.Rptr. 211, 765 P.2d 373). The tort is thus disfavored and has been cabined by modern courts. Accordingly, even where the insurer might be more “vulnerable” than the insured— such as where the insured is a sophisticated negotiator and is in better economic condition than the insurer- — the insurer still cannot sue the insured in tort for bad faith breach of the implied covenant. Agricultural Ins. Co. v. Superior Court, 70 Cal.App.4th 385, 397-99 & n. 4, 82 Cal.Rptr.2d 594 (1999). See also Kransco v. Am. Empire Surplus Lines Ins. Co., 23 Cal.4th 390, 405-07, 97 Cal.Rptr.2d 151, 2 P.3d 1 (2000) (discussing Agricultural with approval and reiterating that a bad faith breach by an insured is still “at base, a breach of contract”). d. Creating new exceptions to the rule. Even when allowing exceptions for a noncontractual duty — -the type of exception least likely to blur the line between contract and tort — the California Supreme Court carefully reviews “public policy” considerations. Specifically, it has expressed concern for respecting the parties’ bargain and allowing parties to voluntarily allocate risks in advance. Robinson Helicopter, the California Supreme Court’s most recent case on the economic loss rule, illustrates the rule, its policies, and its exceptions. Robinson, a helicopter maker, must comply with strict federal requirements for the parts it uses. Id. at 986, 22 Cal.Rptr.3d 352, 102 P.3d 268. It contracted with Dana to supply an important safety component. Id. at 985 & n. 2, 991 n. 7, 22 Cal.Rptr.3d 352, 102 P.3d 268. The contract obligated Dana to supply Robinson with components that conformed to precise specifications. Id. at 985-86, 22 Cal.Rptr.3d 352, 102 P.3d 268. During one period under the supply contract, Dana changed the specifications to which the safety component was made. Id. at 986, 22 Cal.Rptr.3d 352, 102 P.3d 268. Dana nevertheless provided intentionally false conformance certificates when it supplied those components. Id. at 986, 987, 22 Cal.Rptr.3d 352, 102 P.3d 268. These began to fail at an alarming rate. Id. at 987, 22 Cal.Rptr.3d 352, 102 P.3d 268. Robinson had to recall the affected helicopters and explain the situation to federal and foreign regulators. See id. at 986, 22 Cal.Rptr.3d 352, 102 P.3d 268. Fortunately, no accidents were traced to the fraudulent components. Id. Robinson Helicopter explained the two categories of exceptions discussed above. Id. at 988-90, 22 Cal.Rptr.3d 352, 102 P.3d 268. It then held that the knowingly false certificates were fraudulent misrepresentations independent of the supply contract. Specifically, providing nonconforming components breached the supply contract; but providing knowingly false certificates was “independent ... fraudulent conduct” that breached an independent tort duty. Id. at 991, 22 Cal.Rptr.3d 352, 102 P.3d 268. But the Robinson Helicopter Court did not rest its exception solely on extraneous fraud in the certificates. Before allowing an exception, the Court noted that the fraudulent safety components “exposed Robinson to liability for personal damages if a helicopter crashed and to disciplinary action by [federal authorities].” 34 Cal.4th at 991, 22 Cal.Rptr.3d 352, 102 P.3d 268 (emphasis added). And the Court summarized its holding as “narrow in scope and limited to a defendant’s affirmative misrepresentations on which a plaintiff relies and which expose a plaintiff to liability for personal damages independent of the plaintiffs economic loss.” Id. at 993, 22 Cal.Rptr.3d 352, 102 P.3d 268 (emphasis added). Moreover, the Court recognized that “[c]ourts should be careful to apply tort remedies only when the conduct in question is so clear in its deviation from socially useful business practices that the effect of enforcing such tort duties will be ... to aid rather than discourage commerce.” Id. at 992, 22 Cal.Rptr.3d 352, 102 P.3d 268 (emphasis added). The Court then reiterated that Dana’s conduct could in no way be considered “socially useful” and that the breaching conduct made Dana a “malefactor[ ]” that “put people at risk.” Id. & n. 7. In the same vein, the Court explained that the Robinson Helicopter parties had not negotiated or provided in their contract for fraudulent representations as to the component’s specifications. Id. at 992, 22 Cal.Rptr.3d 352, 102 P.3d 268. Finally, citing a law review article on sales of goods, the Court recognized that “sophisticat[ed]” parties to commercial contracts can “understand and allocate the risks relating to negligent product design” but even sophisticated parties cannot “be expected to anticipate fraud and dishonesty in every transaction” on goods. Id. at 993, 22 Cal.Rptr.3d 352, 102 P.3d 268 (emphasis added). Robinson Helicopter’s repeated references to the products liability version of the rule, its emphasis on the particular goods at issue, and its expressly “narrow” and “limited” holding, have led at least one other federal court to question whether the Robinson Helicopter analysis can apply to contracts other than those for goods. Oracle USA, Inc. v. XL Global Svcs., Inc., 2009 WL 2084154, at *6, 2009 U.S. Dist. LEXIS 59999, at *18 (N.D.Cal. July 13, 2009) (Patel, J.). Regardless whether it can apply outside products liability cases, Robinson Helicopter creates a “narrow” and “limited” exception for extreme circumstances. Most important, it demonstrates California’s strong resistance to further eroding the economic loss rule. 3. The negligence and negligent misrepresentation claims against Countrywide. The economic loss rule precludes United Guaranty’s negligence and negligent misrepresentation claims against Countrywide. a. Any nonfraud tort duty is “coterminous with,” and encompassed by, contractual duties. “[A]ny negligence law duty of care which might devolve upon an insured when that insured enters into an insurance contract would be coterminous with the insured’s contractual duties.” Agricultural, 70 Cal.App.4th at 389, 82 Cal.Rptr.2d 594. For the negligence and negligent misrepresentation claims, Countrywide’s allegedly tortious conduct and representations were all made pursuant to a purely contractual duty. The bases for these claims are the representations about its underwriting standards and the specific data about individual loans, made in Exhibit B to the Commitment Letters. AC ¶¶ 48-49. By the Master Policy’s terms, these representations as to each loan became part of the policy for that loan only. § 1.31 (providing that all application materials and the Commitment Letter is “made a part [of the policy] with respect to the Loans to which they relate”). Any breach based on these misrepresentations is therefore a breach of the contract that governs them (and in which they were made). b. No Robinson Helicopter-type exception is available in the present situation. The present allegations do not even approach a Robinson Helicopter-type exception. First and foremost, the alleged misrepresentations are not conceptually distinct from the contract. The conformance certificates in Robinson Helicopter were the separate, intentional conduct that subjected Dana to tort liability. 34 Cal.4th at 991, 22 Cal.Rptr.3d 352, 102 P.3d 268. Those separate representations were made after the supply contract was formed. Here, all the representations were made prior to, or at the moment of, contract formation. Nor were the representations collateral to the contract. Such representations might give rise to fraudulent inducement, but not negligence or negligent misrepresentations. Second, there is no threat of personal liability above and beyond the contract. The threats are (1) that the extent of liability on the contract is much more than United Guaranty calculated ex ante and (2) that United Guaranty will have to use its contracted-for procedure for exercising its cancellation rights. This is not the kind of extracontractual third-party liability that California courts consider when making an exception to the economic loss rule. Robinson Helicopter, 34 Cal.4th at 993, 22 Cal.Rptr.3d 352, 102 P.3d 268 (considering regulators’ actions and Robinson’s potential personal liability to third parties for helicopter malfunction), and Santa Clara, 137 Cal.App.4th at 328, 40 Cal.Rptr.3d 313 (considering the “potential liability” of lead paint users to third parties harmed by the lead paint, as discussed in supra n. 23). Further, mortgage insurance is relevantly distinguished from Robinson Helicopter ’s safety components or Santa Clara’s lead paint. Much of Robinson Helicopter’s reasoning is specifically tethered to sales of goods; not services. And mortgage insurance does not threaten the kind of bodily harm that fraudulent helicopter safety components and the fraudulently concealed risks of lead paint present. California’s economic loss rule originated in products liability; in products liability, bodily harm is an exception to the rule. Robinson Helicopter, 34 Cal.4th at 988, 22 Cal.Rptr.3d 352, 102 P.3d 268; see also Santa Clara, 137 Cal. App.4th at 329, 40 Cal.Rptr.3d 313 (emphasizing “permanent [bodily] damage” to those exposed to lead paint). Moreover, allowing suit in tort would “discourage commerce.” Robinson Helicopter, 34 Cal.4th at 992, 22 Cal.Rptr.3d 352, 102 P.3d 268. Of course, this is a threat with any exception to the economic loss rule. But the threat is particularly great when parties on both sides of the transaction are sophisticated. Finally, as the next section explains, these parties could — and did — contract about how to handle misrepresentations— even fraud. Accord Robinson Helicopter, 34 Cal.4th at 993, 22 Cal.Rptr.3d 352, 102 P.3d 268 (justifying an exception to the economic loss rule in part because parties to a product supply contract cannot “be expected to anticipate fraud and dishonesty in every transaction” and the parties to that case had not); Oracle, 2009 WL 2084154, at *6, 2009 U.S. Dist. LEXIS 59999, at *20 (declining to find a Robinson Helicopter-type exception because the parties to that case “could rationally calculate the possibility of breach”). c. To whatever extent a tort duty could be extraneous to the contracts, the contracts expressly govern the result. “It is axiomatic that absent a violation of public policy, a statute, or a constitutional provision, the parties to a private agreement may allocate risks in any manner they may choose.” Reserve Ins. Co. v. Pisciotta, 30 Cal.3d 800, 814, 180 Cal.Rptr. 628, 640 P.2d 764 (1982). In this case, sophisticated parties reached a bargain that expressly allocates the risk of misrepresentations — including fraudulent misrepresentations. To effect the allocation, the parties contracted as to the misrepresentations’ effects. Thus, even if a Robinson Helicopter-like tort duty could be implied against Countrywide, the parties contracted around such a result. The provisions discussed in supra Section IV.D.4 (discussing the policy provisions) unambiguously displace any tort duty to United Guaranty with regard to Countrywide’s underwriting. There is no reason to disregard the express bargain that these sophisticated business entities made. d. The California Insurance Code provides additional default rules that overlay the ordinary contract rules governing insurance contracts. United Guaranty attempts to circumvent the economic loss rule by arguing that some provisions of the California Insurance Code impose a tort duty “extraneous” to the contract. United Guaranty locates no case that reads an independent tort duty into the Insurance Code provisions it cites. Cal. Ins.Code §§ 330-339 (providing for contract rescission for concealment of facts during contract negotiations under some circumstances), 350-61 (providing for contract rescission for misrepresentations under some circumstances). First, these provisions’ plain text speaks only to contractual duties and rights. See, e. g., Ins.Code. § 332 (“Each party to a contract of insurance ....”) (emphasis added); Ins.Code § 359 (providing that a “party [may be] entitled to rescind the contract ” under some circumstances) (emphasis added). Accordingly, these statutes have long been held to provide contract rules that supplement, but do not replace, ordinary contract rules — at least absent an agreement to the contrary. See Resure, Inc. v. Superior Court, 42 Cal.App.4th 156, 162-63, 49 Cal.Rptr.2d 354 (1996) (collecting cases and explaining that these statutes “are in the nature of special provisions pertaining to insurance contracts, which are superimposed upon [rather than replace] those provisions of law which govern contracts generally.” (quoting DeCampos v. State Comp. Ins. Fund, 122 Cal.App.2d 519, 529, 265 P.2d 617 (1954))). Indeed, these provisions serve to “safeguard the parties’ freedom to contract.” Mitchell v. United Nat’l Ins. Co., 127 Cal.App.4th 457, 469, 25 Cal.Rptr.3d 627 (2005). These provisions should not to hinder that freedom by threatening tort remedies for ordinary contractual breach. Second, the California Supreme Court recognizes that even the well established “bad faith” tort against insurers is “a major departure from traditional principles of contract law.” Erlich, 21 Cal.4th at 553, 87 Cal.Rptr.2d 886, 981 P.2d 978 (quoting Foley, 47 Cal.3d at 690, 254 Cal.Rptr. 211, 765 P.2d 373). It is highly unlikely these contract-related provisions in the Insurance Code were intended to work an even further departure from contract law. Relatedly, inferring from these provisions a tort duty that runs to the insurer would entirely undermine California’s repeated refusal to impose tort duties upon insureds. California courts consistently hold that insurance tort duties run from the insurer to the insured — but not viceversa. Supra Section 5.A.2.C (explaining the tort of bad faith breach of implied covenant in the insurance context). e. United Guaranty’s vague suggestion that its long course of dealings with Countrywide, and Countrywide’s alleged expertise in subprime mortgages, cannot create a “special relationship.” In addition, United Guaranty suggests that its long (approximately 40-year) business relationship with Countrywide creates a special duty. First, these allegations are not particularized enough to surpass Rule 9(b). AC ¶¶ 4, 30, 61. But even if the allegations did meet the pleading standard, they still could not create a special relationship as a matter of law. Again, there are only “rare exceptions” to the principle that a “a business entity has no duty to prevent financial loss to others with whom it deals directly.” Quelimane Co. v. Stewart Title Guar. Co., 19 Cal.4th 26, 59, 77 Cal.Rptr.2d 709, 960 P.2d 513 (1998). The alleged situation does not come close to generating an exception to the rule: These parties were not mismatched in negotiating power. Nor was Countrywide’s expertise in the mortgage business plausibly superior to this mortgage insurer’s expertise in writing mortgage insurance. In sum, it is implausible on its face that two sophisticated business organizations— even if they have had arm’s-length contractual relationships throughout the years — could create the kind of special relationship that impels California courts to protect against fiduciaries’ misdeeds. Accord Freeman & Mills, Inc. v. Belcher Oil Co., 11 Cal.4th 85, 97, 44 Cal.Rptr.2d 420, 900 P.2d 669 (1995) (“Whatever need there may be to provide special remedies to cover special relationships, there is no similar need in routine business cases.” (internal citation and quotations omitted)). At most, the allegations suggest that United Guaranty elected not to exercise its audit rights until well after the transactions closed. Even if United Guaranty chose to delay exercising its audit rights because of its history with Countrywide, such allegations say less about a “special relationship” than about risk appetite and a preference for high-volume transactions. 4. The negligence claim against BNY Trust. United Guaranty alleges that BNY Trust acted negligently by failing to uncover Countrywide’s alleged misrepresentations. AC ¶¶ 70-71. United Guaranty also alleges that BNY Trust has negligently failed to police its agent’s claims handling. Id. ¶ 72. BNY Trust’s relationship with United Guaranty is purely contractual. BNY Trust is the sole named insured. BNY Trust (in its capacity as trustee) is just as much a party to the Commitment Letters as Countrywide. As a result, the claims against BNY Trust are subject to the same analysis as above. 5. Potential claims-related fraud claim against BNY Trust. United Guaranty argues that agency principles allow BNY Trust to be held liable for claims conduct by its Countrywide-affiliated agent (or agents). An insured cannot be sued under the “bad faith” tort for claims-related conduct, but ordinary fraud may still apply to insurance claims. Agricultural Ins. Co. v. Superior Court, 70 Cal.App.4th 385, 401-02, 82 Cal.Rptr.2d 594 (1999). However, amending the AC to plead claims-related fraud (whether by BNY Trust or an agent), would still be futile. As explained above, the Master Policy expressly provides for claims “fraud” and provides remedies for claims fraud. Section IV.D.4 (discussing the policy provisions). Again, California has a strong policy in favor of allowing contracting parties to define and limit their risk exposure. Here, sophisticated business entities agreed to contractually handle claims fraud by the insured. These contract terms therefore subsume any tort remedy for claims fraud. 6. The fraudulent inducement claim against Countrywide. The economic loss rule poses no barrier to a properly pled fraudulent inducement claim: “[I]t has long been the rule that where a contract is secured by fraudulent representations, the injured party may elect to affirm the contract and sue for fraud.” Lazar v. Superior Court, 12 Cal.4th 631, 645, 49 Cal.Rptr.2d 377, 909 P.2d 981 (1996). Therefore, the only issue is whether United Guaranty has properly pled fraudulent inducement. It has not because: (1) the inducement allegations fail to meet Rule 9(b); and (2) even if all the inducement allegations are considered, reasonable reliance is implausible on its face. a. The alleged inducing conduct and representations are inadequate under Rule 9(b). Most allegations characterized as inducement allegations are insufficiently particular. For example, Countrywide’s representations that its guidelines were “developed over time to screen the creditworthiness of buyers and the likelihood that mortgage loans would be repaid” do nothing more than describe what underwriting guidelines are; such allegations say nothing about the guidelines’ content or effectiveness. ¶¶ 6-7. United Guaranty generally alleges that it began transacting with Countrywide approximately forty years ago, ¶ 4, and makes the conclusory assertion that “[throughout its relationship with United Guaranty, Countrywide extolled its prudent underwriting standards and disciplined adherence to those standards.” ¶ 30. However, the extolling’s particulars go to Countrywide’s general operating procedures — not to the class of loans (“subprime”) in issue. Id. Further, the representations about Countrywide’s operations are alleged to be false or misleading as of the time of securitization transactions, not when they were made (“[throughout” the parties’ 40-year history). Id. A few inducement allegations are sufficiently particular. For example, United Guaranty alleges a particular oral representation by a Countrywide credit officer. ¶ 44. United Guaranty also alleges a particular email from a Countrywide risk manager about Countrywide’s subprime underwriting. ¶ 45. This email is alleged to pertain to the type of loan — subprime loans — that United Guaranty was insuring. Id. Two allegations relate to representations made in Countrywide’s Technical Manuals. ¶¶ 46-47. But these sufficiently particular allegations are irrelevant. The oral representation concerns Countrywide’s general operations, not its underwriting standards for the loans (or types of loans) to be insured. And the Countrywide risk manager’s email occurs after United Guaranty was alleged to have been induced into the transactions at issue. Compare ¶ 43 (alleging the transactions at issue to have occurred between October 2006 and June 2007), with ¶ 45 (alleging a March 2007 email). Likewise, the Technical Manuals are not the Subprime Guidelines that the insurance contracts — and other AC allegations, ¶ 52, Exh. B — show governed the underwriting for the particular mortgages in issue. Further, to the extent that “inducement” could go to United Guaranty’s decision to engage in “delegated” underwriting, United Guaranty made that decision in 1990. ¶ 29. Any eirca-1990 representations about Countrywide’s operations and loan quality that induced United Guaranty to engage in delegated underwriting are not alleged to be false. ¶¶ 31-33, 35, 38 (alleging the relevant changes in Countrywide’s operations occurred around 2004-06). And the AC alleges noninducement reasons why delegated underwriting “is widely used in the mortgage insurance industry. ...” ¶29. After applying Rule 9(b), United Guaranty is left with no discernable inducement allegations. b. Even if all the inducement allegations survived Rule 9(b), reasonable reliance is implausible on its face under Rule 8(a). Fraudulent inducement requires reasonable reliance. Alliance Mortgage Co. v. Rothwell, 10 Cal.4th 1226, 1239, 44 Cal.Rptr.2d 352, 900 P.2d 601 (1995). Reasonable reliance can be decided as a matter of law. Id. Under California law, reasonable reliance is judged by an objective standard. Id. at 1240, 44 Cal.Rptr.2d 352, 900 P.2d 601. Importantly, that standard is calibrated to the plaintiffs “own intelligence and information.” Id. The standard does not bind a court to assume a plaintiff has the “minimum knowledge of a hypothetical, reasonable man.” Id. Assuming that the reliance allegations are particular enough to survive Rule 9(b), the controlling federal pleading standard requires reliance allegations to be facially plausible. But even if no allegations are stripped under Rule 9(b), nothing in the AC makes reasonable reliance on the alleged inducements facially plausible. No reasonable insurer would rely upon generalized representations about “quality” underwriting — especially oral representations. Nor would a reasonable insurer rely upon “Technical Manuals” when “Subprime Guidelines” are what expressly govern the mortgages to be insured. In addition, any reasonable mortgage insurer that (1) was conducting multibillion-dollar bulk transactions and (2) had an express right to audit or sample the underlying loan files before the transactions closed, would engage in some degree of auditing or sampling of the underlying loan files to be insured. United Guaranty had the audit right; indeed, under the Commitment Letters it may have had some due diligence obligation. CL ¶ 8.1. Assuming the truth of United Guaranty’s complaint, as must be done at this stage, then “over 55%” of the insured mortgages failed to meet Countrywide’s representations. AC ¶ 68. Under that assumption, the only plausible inference is that United Guaranty failed to conduct any audit before closing the transactions. Thus, United Guaranty’s own allegations defeat its claims. Weisbuch v. County of Los Angeles, 119 F.3d 778, 78